Wrongly wrong on the Australian dollar!

See the latest Australian dollar analysis here:

Macro Afternoon

DXY has broken out and is flying as EUR and CNY cop it:

AUD has been mauled versus DMs and the technicals are ugly with a bearish descending triangle right at breaking point:

It is mixed against EMs:

Gold is under pressure but doing OK all things considered:

Oil has flamed out:

Metals are not bullish China suddenly:

Nor miners though they lifted last night:

EM stocks have turned cold:

But junk is OK:

Treasuries sold:

Bunds were bought:

Aussie bonds have given back a little post-CPI:

And stocks are relentless:

So, my short term Aussie dollar bullish call has turned pear-shaped. The violence of the selling post-CPI is now being compounded by jitters around Chinese stimulus as the Poliburo failed to endorse endless debt (though did enough to signal it is still forthcoming in my view) and the PBOC hinted at no more RRR-cuts, via Reuters:

China’s central bank is likely to pause to assess economic conditions before making any further moves to ease lenders’ reserve requirements, after better-than-expected growth data reduced the urgency for action, policy insiders said.

Although the central bank’s easing bias remains unchanged, it sees less room this year for cutting reserve requirement ratios (RRRs) – the share of cash banks must hold as reserves – as fiscal stimulus plays a bigger role in spurring growth, according to government advisers involved in internal policy discussions.

The People’s Bank of China (PBOC) is also worried that pumping too much cash into the economy could reignite bubbles over time, the policy insiders said, and wants to save some of its policy ammunition.

“In the short term, it’s not necessary to use RRR cuts to boost economic growth,” one policy adviser told Reuters. “Monetary policy should leave some room – if economic uncertainties rise or economic conditions deteriorate, the central bank could ease policy.”

Worried about bubbles and already a strong rebound? Both are a laugh. The entire economy is a bubble now and the Q1 rebound was pure data bullshit. Even so, there probably doesn’t need to be more cuts given the rate of growth in credit over Q1 but markets want MOAR or its no dice for now.

As for the rebound, tell that to the key China barometer in Korea:

So long as China is doubt so are EMs and commodities:

As well as any European rebound as the German IFO remained ugly:

The China rebound story is for H2 but it appears that is too long a wait for markets that are drunk on lowflation. Until China and the Europe see more life the US out-performance story holds sway and the Australian dollar falls.

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  1. St JacquesMEMBER

    Yoohoo my little collection of USDs are up.Thankyou very muchly. Nooooobody could have seen this coming. hahahaha Things are looking up…oh wait….the country is totally rooted.

    • I am with you St Jacques but as I start to get my hopes up the DAMN thing shoots back up on any kind of fair news with China or Australia…… I just dont get it. Things are F%^KED here and just a fart in the wind of something that is ok news then it shoots to the moon.

    • Gold has absorbed some big hits recently with price barely reacting. Bodes well for the medium term.

  2. My feeling you weren’t wrong on AUD
    You just made a bet on a China rebound based on the Ponzi
    I think people are underestimating how quickly world is slowing down
    Think we are heading into a global recession now that will get noticeably worse in H2
    Think you may see 7050/70 to re enter USD
    Think you exited Aussie bonds too early, think we will break 1% this year on the 10 year

    I saw an interview with CEO of Aust largest wool company and he said China has really slowed, think China is slowing much more and China isn’t buying as much from Germany Aust etc
    Let’s see the numbers but I wouldn’t believe China
    I’ve also spoken to senior people in industry in oz and they said things are feeling ominous

    All it takes for a few terrorist attacks, people get scared stop travelling and stop spending

    I know people on here won’t believe the effect of solar min 24, sunspot minimisation into Dec

    Think things are going to get very ugly in H2 and Aussie property resume its fast downturn in sept onwards

    M north is right = you ain’t seen anything yet

    Vote 1 for Pete RBA governer

    • Agree.Speak to people senior management in health care and carsales in Australia and things are not good.Overall attitude of the people is poor.Very disillusioned and angry.H2 is not going to be good

      • Matthew one of my friends is part owner of one of the most successful merc dealerships in oz and car sales are slowing big time I think H2 not good is an extreme understatement
        I spoke to a military expert and he said there has been a huge build up in global military capabilities and war normally follows
        If you are angry what do you think global leaders and other struggling countries are feeling
        Think we are headed into very uncertain times and severe downturn

      • proofreadersMEMBER

        Nah – the RBA happy-clappy squad will fire their last couple of shorts for an orgasm.

      • I am not particularly dissillusioned and angry it is those that surround me both personally and in my work.This was predictable and I never played the game.Ihave also remained true to my beliefs during this period of time.That being the case I fear I may have to leave the country I have lived in for all my life.But I am prepared for that(have set up citizenship for my family in another country and have money parked elsewhere)

      • Wow that bad
        Any suggestions where to go?
        I was going to Bangkok but have decided to move from Melb to Gold Coast
        What a life you have up in SE QLD.